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Nightmare: BoE Hikes Most In 27 Years, Predicts Recession, 13% Inflation
The Bank of England hiked rates for a sixth consecutive meeting Thursday.
The 50bps move was the largest since 1995, prior to independence. The vote was 8-1.
Markets expected the move, as did most forecasters. At the June gathering, the Committee pledged to be "particularly alert to indications of more persistent inflationary pressures" and promised to "act forcefully in response" if necessary.
The largest hike in 27 years (figure below) apparently counts as forceful, even as the BoE still tr
Boris left a mess. Brexit certainly did not help by among other things, causing labor shortages
Looks more like stagflation every day.
How to square with long yields down, multiples up.
In the good old days (40 some odd years ago) a person could reasonably expect short term interest rates to be slightly above the inflation rate. When interest rates are more than 7% below the inflation rate, they might as well be zero. It seems to be the same in the entire developed market universe. Even the 3-month USD LIBOR is is substantially below the inflation rate.
I suspect that if the Fed wasn’t controlling the rates, then the good old days would probably return.